Question

Please answer the following question.

Preparing Adjusting Entries Jake Thomas began Thomas Refinishing Service on July 1, 2019. Selected accounts are shown below as of July 31, before any adjusting entries have been made. Unadjusted Account Balances Debit Credit Prepaid rent $5,700 Prepaid advertising 630 Supplies inventory 3,000 Performance obligation liability $600 Refinishing fees revenue 2,500 Support Using the following information, prepare the adjusting entries necessary on July 31 (a) using the financial statement effects template and (b) in journal entry form. (C) Set up T-accounts for each of the ledger accounts, enter the balances above, and post the adjusting entries to them. 1. On July 1, the firm paid one year's advance rent of $5,700 in cash. 2. On July 1, $630 cash was paid to the local newspaper for an advertisement to run daily for the months of July, August, and September. 3. Supplies still available at July 31 total $1,100. 4. At July 31, refinishing services of $800 have been performed but not yet recorded or billed to customers. The firm uses the account Fees Receivable to reflect amounts due but not yet billed. 5. A customer paid $600 in advance for a refinishing project. At July 31, the project is one-half complete.

Answer 1

Thomas Refinishsing services Prepaid Rent 57001 1 Supplies Inventory 3000 3 Bal 475 Bal 1900 Adjusting Enteries Trans. Particulars 1 Rent Expense Prepaid Rent (Rent expired) Debit in $ Credit in $ 475 475 Bal Bal 5225 5700 1100 3000 5700 3000 2 210 Advertisement Expense Prepaid Advertising (Expense expired) Prepaid Advertising 630 2 210 Bal 210 Refinishsing Fees Revenue Bal 2500 4 800 3600 5 300 Bal 420 Bal 3 1900 630 630 3600 3600 Supplies Expense Supplies Inventory (Supplies used) 1900 4 Fees Receivable 800 Bal 800 5 Bal Performance Obligation Liabiity 300 Bal 600 300 600 600 4 800 800 Fees Receivable Refinishsing Fees Revenue (Revenue earned) 800 800 Advertisement Expense 210 5 300 3 2 Performance Obligation Liabiity Refinishsing Fees Revenue (Revenue earned) Supplies Expense 1900 Bal 1900 300 1900 Bal 210 19 1900 210 210 1 Rent Expense 475 Bal 475 475 475

+ Trans. 1.Adjusting Entry for Rent Expense 2.Adjusting Entry for Advertisement Expense 3.Adjusting Entry for Supplies Expense 4.Adjusting Entry for Fees Revenue 5.Adjusting Entry for Fees Revenue Totals Balance sheet Income Statement Cash Asset + Non Cash Asset = Liabilities + Contri.Capital + Earned Capital Revenues - Expenses = Net Income -475 475 -475 -210 210 -210 -1900 1900 -1900 800 800 800 -300 300 300 0 -1785 0 0 2585 -1485 + = + + -300 + + 1100

+ Trans. 1.Adjusting Entry for Rent Expense 2.Adjusting Entry for Advertisement Expense 3.Adjusting Entry for Supplies Expense 4.Adjusting Entry for Fees Revenue 5.Adjusting Entry for Fees Revenue Totals Balance sheet Income Statement Cash Asset + Non Cash Asset = Liabilities + Contri.Capital + Earned Capital Revenues - Expenses = Net Income -475 475 -475 -210 210 -210 -1900 1900 -1900 800 800 800 -300 300 300 0 -1785 0 0 2585 -1485 + = + + -300 + + 1100